Mineral Mining in Africa

Legal and Fiscal Regimes

Evaristus Oshionebo

• Publisher: Taylor & Francis
• Year: 2020
• Print ISBN: 9780367616359
• eBook ISBN: 9781351055529
• Edition: 1
• Topic: Historia
• Subtopic: Teoría y práctica del derecho

Africa is endowed with commercially viable quantities of several minerals and metals, and, more than ever before, African countries wish to harness their mineral resources for their economic development. The African mining sector has witnessed a revolution in terms of new mining codes and amendments to extant mining codes, which are designed to achieve a multitude of objectives, including the assertion of greater control over exploitation of mineral resources; optimization of resource royalties and taxes; promotion of equity participation in mining projects; enhancement of indigenization in the form of domestic participation in mineral production and local content requirements; value addition and beneficiation in terms of domestic processing of raw mineral ores and metals in Africa; and the promotion of sustainable practices in the mining sector.

This book analyzes the legal and fiscal frameworks for hard-rock mining in several African countries including Botswana, Democratic Republic of Congo, Ethiopia, Ghana, Guinea, Kenya, Namibia, Nigeria, Liberia, Tanzania, Sierra Leone, South Africa, South Sudan, Zambia, and Zimbabwe, with reference to other resource-rich countries. It engages in a comparative analysis of mining statutes in Africa with regard to topics such as the acquisition of mineral rights; types of mineral rights; the nature of mineral rights; the rights and obligations of mineral right holders; security of mineral tenure; surface rights; fiscal regimes including royalty and tax regimes; resource nationalism in the mining sector; management and utilization of mining revenues including benefit-sharing arrangements between mining companies and host communities; environmental stewardship; and sustainable exploitation of mineral resources.

1Overview of mining in Africa

1 Introduction

Africa is endowed with commercially viable quantities of several minerals and metals, including gold, diamond, nickel, platinum, copper, cobalt, chromium, manganese, uranium, iron ore, tantalum, titanium, and silver. In fact, Africa accounts for 30% of the world’s total mineral reserves.¹ Africa holds the world’s largest reserves of several minerals, including platinum, gold, diamond, chromite, manganese, and vanadium.² In reality, the current statistical data on mineral deposits in Africa understates Africa’s mineral wealth given that African lands have yet to be prospected fully for mineral deposits.

Africa accounts for a significant proportion of the minerals and metals produced across the globe. South Africa alone produces “three-quarters of the world’s platinum, 40 per cent of chromium and over 15 per cent of gold and manganese”.³ Two of the top three producers of platinum are African countries.⁴ South Africa is the world’s largest producer of chromium, manganese, and platinum, while the Democratic Republic of Congo (DRC) leads the world in cobalt and tantalum production.⁵ In fact, ten of the world’s top 29 producers of manganese are African countries, while six of the top 18 producers of cobalt are African countries.⁶ As far back as 2005, Africa not only led the world in the production of diamonds, vanadium, and platinum group minerals but also held more than 60% of the world’s known reserves of these minerals.⁷

In terms of the share of global production, South Africa produces 48.26% of the world’s chromium, 29.07% of the world’s manganese, 15.23% of the world’s titanium, 72.07% of the world’s platinum, and 80.70% of the world’s rhodium.⁸ Likewise, the DRC accounts for 60.85% of the world’s cobalt production and 43.04% of the world’s tantalum production, while Botswana accounts for 17.45% of the world’s diamond gem production.⁹ Africa equally does well with regard to the quality and production value of minerals. Three of the world’s top-20 mineral-producing countries based on the value of minerals are African countries. Of these top-20 countries, South Africa, the DRC, and Mozambique occupy the 5th, 17th, and 20th positions, respectively.¹⁰

1.1 History of mining in Africa

Mining in Africa predates the arrival of European colonialists to the continent. Mining of minerals such as iron, gold, copper, lime, and salt was undertaken by indigenous Africans long before the advent of colonial rule in Africa. Africans mined, processed, and traded copper for centuries prior to colonial rule and, in fact, the major copper-producing areas in modern Africa, including the Copper belt, “were sites of indigenous production for many years before the takeover by colonial foreign mining companies”.¹¹ For example, the Ingwenya mine in Swaziland was exploited by Africans over 2000 years ago for iron ochres for rock paintings.¹² There is evidence that metallurgy with copper and iron began in West, Central and East Africa around 800 BC.¹³ By the 8th century AD, the West African region was already famous for its gold industry which was one of the main pillars on which ancient African empires, including the Ghana, Mali and Songhai empires, were built.¹⁴ In the 10th century AD, gold was “a regular article of commerce in the overland trade between the territories bordering the Gulf of Guinea and the Mediterranean countries”.¹⁵ In fact, “in the millennia preceding colonialism, west and southern Africa were major exporters of gold to the rest of the world”.¹⁶ When Portuguese explorers arrived in the Gold Coast (now Ghana) in 1471, they met Africans already trading in gold.¹⁷ During the pre-colonial era, Africans used various mining techniques including alluvial mining, panning, shallow and deep pit mining, underground mining, and underwater sand dredging.¹⁸ Modified versions of these ancient mining techniques and practices are still used by artisanal miners in modern Africa.

However, the mining of mineral resources intensified during the colonial era because the primary objective of European colonial rule in Africa was the exploitation of the continent’s rich natural and human resources. In Tanzania, for example, the discovery of gold in the 1890s by European colonialists was followed by the gold rush in the Lupa region in the 1920s.¹⁹ In Ghana, the European colonizers began large-scale mining in the late 19th century, and by 1941 bauxite was being produced in Ghana to satisfy the demands of the allied forces during World War II.²⁰

Colonial governments formalized the mining industry in Africa through the enactment of mining Ordinances. For example, in colonial Nigeria, mining was governed by the Minerals Ordinance, 1916, while in the Gold Coast, mining rights could only be acquired based on the Concessions Ordinance, 1990 and the Mining Rights Regulation Ordinance, 1905. These mining statutes were aided by land Ordinances (such as Nigeria’s Public Lands Acquisition Ordinance, 1917) which empowered colonial governments to compulsorily acquire land for public purposes. Interestingly, under these land Ordinances mining was deemed a public purpose, thus entitling colonial governments to seize land from native Africans for mining-related purposes.²¹ Worse yet, colonial governments also enacted laws that compelled native Africans to work for foreign miners in deplorable conditions.²² In addition, colonial governments subjected Africans to a poll tax which, in times of labour shortage, was arbitrarily increased simply to force Africans “from their villages to seek work in the very poor conditions of the mines”.²³

1.2 Ownership of minerals

A pre-eminent legacy of colonialism in Africa is the vesting of ownership of natural resources in the central governments of African countries. During the colonial era, the European colonialists enacted laws vesting ownership of mineral resources in colonial governments in an apparent attempt to ensure absolute control over Africa’s natural resources. In the colony of Nigeria, for example, the Minerals Ordinance, 1916 provided that “the entire property in, and control of all minerals and mineral oils in, under, or upon any lands in Nigeria, is and shall be vested in the Crown”.²⁴ Upon attaining political independence, African countries retained colonial laws regarding ownership of minerals apparently because it suited the interest of the new political elites. For example, the Constitution of modern Nigeria retains the language of the Minerals Ordinance, 1916 by providing that

the entire property in and control of all minerals, mineral oils and natural gas in, under or upon any land in Nigeria or in, under or upon the territorial waters and the Exclusive Economic Zone of Nigeria shall vest in the Government of the Federation.²⁵

Similarly, in Ghana

[e]very mineral in its natural state in, under or upon land in Ghana, rivers, streams, water-courses throughout the country, the exclusive economic zone and an area covered by the territorial sea or continental shelf is the property of the Republic and is vested in the President in trust for the people of Ghana.²⁶

In South Africa, “mineral and petroleum resources are the common heritage of all the people of South Africa and the State is the custodian thereof for the benefit of all South Africans”.²⁷ The Constitutional Court of South Africa has held that the Mineral and Petroleum Resources Development Act 28 of 2002 (MPRDA) abolished private ownership of minerals in South Africa and instead vests all mineral rights in the state.²⁸ Similarly, in Zambia “[a]ll rights of ownership in, searching for, mining and disposing of, minerals wheresoever located in the Republic vest in the President on behalf of the Republic”.²⁹

The vesting of ownership of natural resources in the central governments of African countries is significant in many ways. First, African governments possess the legal authority to grant, revoke, suspend, or renew mineral rights upon the grounds stipulated in the relevant statute. Second, African governments set the legal and fiscal frameworks for mineral exploitation through statutory enactments and contractual arrangements. African governments establish the parameters for the exploitation of minerals including the rate of royalties and taxes payable by mining companies. Third, persons who wish to exploit Africa’s natural resources must enter into legal or contractual relationships with African governments as a precondition to the e...

Table of contents

• Cover
• Half Title
• Title
• Copyright
• Dedication
• Contents
• List of tables
• Preface
• Acknowledgements
• Abbreviations
• 1 Overview of mining in Africa
• 2 Types of mineral rights in Africa
• 3 Acquisition of mineral rights
• 4 Security of mineral tenure
• 5 Fiscal regimes for mineral exploitation
• 6 Legal stabilization of mining investments
• 7 Resource Nationalism in the African Mining Industry
• 8 Management and utilization of mining revenues
• 9 Mining and the environment
• 10 Conclusion
• Index